Is the chip industry hit by a trend of "single cutting"? TSM. US slashed up to 50% of supply chain orders
Source: Fast News
Zhitong Finance APP has learned that in September, the global chip product sales shrank for the first time since the beginning of 2020. Industry data shows that the global chip shortage is rapidly turning into oversupply. The Washington based American Semiconductor Industry Association (SIA) said that global chip product sales fell 3% in September from a year earlier.
Some industry observers reported that the demand for consumer electronics, smartphones and personal computers was rapidly declining, and chip suppliers faced the problem of oversupply. Previously, the demand for these chip products soared during the blockade in 2020. At the same time, some of the largest customers of TSM. US, the world's largest chipmaker, began to cut orders.
With the aggravation of semiconductor inventory problems in the supply chain, even TSMC could not bear the order reduction storm that followed. According to insiders, many of its top ten customers have cut more orders than expected since the third quarter.
The prosperity of the chip industry is declining. When TSMC was making capital expenditure for the second time, it was also reported that key customers of the 3-nanometer process had temporarily cancelled their orders. As a result, TSMC cut down the supply orders of the cooperative factories by up to 40% or 50%, covering fields such as renewable wafers, key consumables, semiconductor equipment, etc., but insiders said that these suppliers were relatively small.
Some insiders said that the TSMC supply chain privately disclosed that orders from TSMC had indeed weakened since the end of the third quarter, and continued to decline in the fourth quarter and the first quarter of next year. As far as we know, the impact areas include the front production process and the rear advanced packaging process, and the impact on the rear stage is greater than the front stage.
Inventory surges and market demand tends to decline
According to the forecast data of the research institute Strategy Analytics, it is estimated that by 2022, the global 5G smartphone shipments will decrease by 150 million units, and the market demand for 5G chips is expected to decrease by 100 million to 120 million units.
An unnamed industry source said that as of the end of June, the global inventory of finished smartphones had reached 200 million, and smartphone manufacturers had cut their orders for chip manufacturers for at least three rounds so far this year.
Analysts from ICwise said that many mobile phone manufacturers had accumulated six months of mobile phone and parts inventory based on higher sales expectations last year and the previous chip shortage.
Sravan Kundojjala, deputy director of technology services for smart phone components of Strategy Analytics, said that smart phone manufacturers have a large number of low-end 5G chips and RF chips in stock.
Is the wave of single chip cutting coming?
For some chip companies, personal computers (PCs) are often the most profitable areas. Gartner, another research institution, estimated that in the second quarter of 2022, global PC shipments totaled 72 million units, down nearly 13% year on year, the largest drop in nine years. The agency also predicted that the global PC shipment will decline by 9.5% in 2022.
It is reported that the demand for chips of smart phones and personal computers accounts for more than half of the global chip foundry capacity. JPMorgan Chase said in a report in September that TSMC, the world's largest foundry, received fewer orders from AMD (AMD. US), NVDA. US, Qualcomm (QCOM. US) and MediaTek.
South Korea is a major chip producer in the world. Its National Bureau of Statistics said on Monday that chip manufacturers' output in September fell 3.5% year on year, higher than the 0.1% drop in August.
According to the data of the Korean Bureau of Statistics, the growth rate of chip inventory in South Korea in September remained at a high of 54.7%. The financial report data of the chip giant is also relatively sluggish. The net profit of Samsung Electronics in the third quarter is lower than expected. The company said that it is expected that the company's performance will not recover until the second half of 2023 at least.
It is worth noting that, due to the lagging capacity expansion of the chip industry, chip manufacturers have been building new capacity in the shortage since the second half of 2020. However, this will start production at the end of this year, which means that the chip industry is likely to have continuous overcapacity - which is also a cyclical phenomenon of the chip market, often going through severe boom and bust cycles.
According to the forecast data of Counterpoint Research, the demand for wafers in 2023 is expected to be equal to or slightly lower than that in 2022, while the production capacity is expected to increase by about 7%. However, Counterpoint also said that the market's demand for the most advanced smartphone chips continued to grow, indicating strong demand for the most high-end devices such as Apple's iPhone series.
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The Economic Daily in Taiwan, China, China, quoted the industry chain news that TSMC had officially reduced its production capacity, so it cut orders on a large scale. The industry chain enterprises providing services for TSMC were cut orders by up to 50%, indicating that TSMC was finally forced to follow suit with the reduction of orders for American chips.